Key takeaways
- The 2009 Credit CARD Act mandates issuers to assess borrowers' means to repay their debts before issuing a card or increasing a credit limit.
- You aren't obligated to provide information about your income to a credit card issuer unless you are applying for a new card or requesting a credit limit increase.
- Responding to a card issuer's inquiry about your current earnings can have its benefits if your pay has increased.
Whether it’s a monthly bill, an unexpected text or an unsolicited promotion, nobody really likes to get contacted by their credit card company. But if your card issuer requests an update of your earnings, you might want to pay attention and respond. While you aren’t required to answer, it could have positive repercussions.
Take a moment and better understand why a card issuer may ask for income updates, the pros and cons of providing this information and the consequences of not responding.
Why a credit card issuer might request income updates
The fact is, you are typically required to provide information about your income when applying for a credit card. These details can help or hurt your chances of getting approved for that card. But once you get the green light and have that credit card in hand, you aren’t forced to divulge any further info on your earnings to your issuer. But that doesn’t mean they won’t try asking if your income has changed.
Credit card issuers make these requests periodically. For example, you might be prompted at least once or twice a year when you log into your credit account online or perhaps via a paper statement you receive in the mail. It’s a way for the lender to check up on you. Follow-up requests after you are approved for the card could potentially be a risk-mitigation tactic, but sometimes this is also a marketing effort: If you have a higher income, they might want to extend you more credit.— Ted Rossman | Bankrate Senior Industry Analyst
Keep in mind that if you have personally requested a credit limit increase, they may also ask about your current income. If so, you’ll need to provide this info if you want that limit to increase. If your current earnings are at an acceptable threshold, they may grant the increase; if not, you could be turned down. But even if you didn’t request a credit limit boost, the issuer may independently explore if you qualify for one.
“Credit card issuers are required to seek updated income information before increasing your credit limit. You may receive the income update request periodically as the issuer’s policies automatically assess your account for a credit limit increase.”
— Ritesh RanjanBusiness Director for credit cards, Capital One
Consider that the 2009 Credit CARD Act requires issuers to assess the ability of each borrower to pay before issuing a card or increasing a credit limit.
“Since that act went into effect, issuers have been increasingly prompting customers to provide or update their income information. Credit card companies have grown increasingly sophisticated in data-based underwriting based on the credit bureaus and other public sources,” adds Ranjan. “However, they are reliant on consumers for data related to income. Hence, they are reaching out to consumers more frequently across channels to collect this data.”
The advantages of providing updated income info
Being forthcoming about your salary or wages can have its benefits.
“You might be granted a higher credit limit, especially if your income has gone up. This could give you more purchasing power,” notes Rossman.
It can boost your credit score, as well.
“Raising your credit limit and keeping your credit usage the same is one of the fastest ways to significantly improve your credit score, as it quickly improves your credit utilization ratio”.
— Carter SeutheCEO, Credit Summit
Divulging requested data may help you qualify for better credit offers, too.
“It could increase your chances of getting approved for new credit and cards with even better perks.”
— Andrew LokenauthOwner, The Finance Newsletter
The drawbacks of providing updated income info
Of course, spilling the beans on what you currently make can have its disadvantages, too. If you earn less today than you did when you applied for the card, that could kill your chances of getting a credit limit increase or receiving any tempting new credit account offers.
“It’s possible that a credit card issuer could cut your credit limit or even cancel your card if you report a lower income that makes them nervous you won’t be able to pay them back,” Rossman cautions.
Even if you report that your take-home pay has bumped up, you could still find yourself facing issues. “Your income information could be shared with affiliates for marketing purposes, and that could result in receiving more junk mail, unsolicited offers, and undesired pre-approved credit promotions sent to you,” Lokenauth cautions. “Furthermore, this information could end up in the wrong hands if the issuer suffers a data hack or breach of sensitive financial information.”
Another downside? If updating your income leads to a rise in your credit limit, you could be tempted to overspend and overuse your card, putting yourself in debt.
The consequences of not responding to an income update request
Again, you aren’t required to respond to an income update request unless you are applying for a credit card or you have asked for a credit limit increase. But what if you already own the card and the issuer later looks you up for a revenue refresh?
“Not providing income when requested will likely make you ineligible for future automatic credit limit increases,” continues Ranjan.
It could also result in missed opportunities for receiving attractive offers and promotions offered by today’s best credit cards — though some people don’t mind seeing fewer emails in their inbox anyway.
Should you update your income?
So what’s your best course of action? Should you voluntarily reveal your current earnings if your issuer requests this information?
“Especially if your income has gone up since you applied for the card, I would suggest sharing the new figure — unless you are worried that you would use a higher credit limit approval as an excuse to overspend,” says Rossman. “If your income has gone down, then maybe you shouldn’t volunteer that info.”
Seuthe seconds those sentiments.
“If your income has stayed the same or decreased, you may not want to update your credit card issuer. There won’t be any benefits for you in this scenario,” he cautions.
It’s okay to politely decline to provide updated information if your situation is unchanged, Lokenauth agrees, “but be prepared for smaller credit limit increases in the future.”
The bottom line
If your credit card company asks about your income, don’t stress: It likely can’t hurt to provide the numbers they seek, unless your pay has plummeted. But remember that you have privacy rights and can say no or ignore the request.
“If you do indicate your income has increased, only report income that you can prove. Inflating income is fraudulent,” says Lokenatuh. “Keep records like pay stubs and tax returns just in case you are asked for verification. Lastly, opt out of preapproved offers if you are concerned about getting more junk mail.”
